Archive for the ‘culture’ Category

Corruption Overseas: An Ethics & Compliance Minefield

The problem of corruption is a tough nut to crack. The bulk of bribery and other forms of corruption (though by no means all of it) goes on in developing countries where rule of law is lax and the opportunities for profit are rich. Companies succumb to the temptations at their peril. The ROI on bribes is pretty hard to specify, and the jail time that can result ought to be a pretty good deterrent. But evidently that doesn’t make the problem much easier.

Last week, in conjunction with Canadian Business, the Jim Pattison Ethical Leadership Program hosted an executive seminar on the topic, called “The Ethics and Compliance Minefield: New Rules for Doing Business Overseas.” The day’s schedule included terrific speakers from Siemens, the World Bank, and the RCMP. (If you want to find out more, see here.)

A number of themes came to the fore during the day.

First was the role of rationalizations. As I’ve written before, rationalizations play a key role in all sorts of wrongdoing. Good people generally need to give themselves excuses if they’re going to do bad things and still look at themselves in the mirror in the morning. This is nowhere more true than in the realm of corruption. Claims like, “That’s just how business is done over there,” and “No one really gets hurt,” or “We’ve always done it that way” or “That’s the only way we’ll make our sales targets” are often false, and seldom provide cogent support for the moral conclusions they are intended to support.

The second theme that came up repeatedly was the question of control systems. Companies whose employees and agents engage in bribery seem (anecdotally, at least) to have weak internal controls. And that’s not surprising. In order for a few million dollars to go “missing” here and there, and end up in the pockets of local politicians or shady middle-men, you’ve pretty much got to be mislabelling the money at the very least. This sort of thing should be worrisome, and not just from the point of view of ethics and compliance. Sloppy business is sloppy business.

A third theme that arose was the notion that companies who want to avoid corruption face what is really just a special case of a more general set of management challenges. Instituting appropriate financial controls is a general standard management challenge. Ensuring overall organizational integrity (in the broadest sense) is a standard management challenge. And engaging in serious organizational change (such as in the wake of a bribery scandal, for instance) is a standard management challenge. In other words, this stuff is the stuff that good managers, and good leaders, ought to be good at, and if they’re not they need to get good at it or face peril.

The final theme that arose was cooperation. Stamping out corruption requires cooperation at several levels. It requires cooperation among countries, and in particular among their police forces and other enforcement agencies. It also requires cooperation between companies, who have a lot to learn from each other. (What, for example, might smaller companies learn from a been-there-done-that company like Siemens?) It also requires cooperation between different kinds of organizations — for example, between companies and law enforcement agencies.

None of this is easy. But given the potent ethical arguments against corruption, not to mention the potent legal penalties for being caught engaging in it, it’s a problem that needs to be tackled head-on.

Ethics, PR, and Dissing Your Customers

Here is a cautionary tale at the intersection of ethics and customer service. It’s a true story, but names and trademarks have been omitted to protect the innocent.

The story is worth relating at length, and it goes like this. A friend of mine recently emailed one of his favourite chain stores — one he patronizes regularly — to make a suggestion: would they please improve the selection of one product line at the location nearest his home?

I’m sure it’s the kind of suggestion that lots of companies get these days. After all, they’ve got websites with Contact pages featuring phone numbers and email addresses and stock photos of smiling operators waiting to take your input.

What happened next, however, is perhaps not an everyday thing. Following his friendly suggestion, my pal was accidentally cc’d on an internal email regarding his query. The gist of that employee-to-employee email was that my friend should be told to go to a different store (farther from his house, but with a broader selection of goods). There was, in addition, speculation that my friend had “too much time on his hands.”

Excuse me?

Resisting the urge to post this story on Twitter, my friend settled for sharing this story with a handful of friends on Facebook. He also forwarded the offending email the company’s CEO, and its head of Communications, and gently suggested that “if staff want to complain about customers, they probably shouldn’t CC them.”

Within just a few hours, my friend received a response. It included an apology. It also included assurance that such disrespect for customers was not consistent with the company’s customer service policy, and that the offending employee had been advised of this fact in no uncertain terms. Finally, it included a gift certificate, along with an invitation to a VIP tour of one of the chain’s stores in order to discuss its offerings with a knowledgeable member of their staff, and a promise to revisit the product offerings as per my friend’s original suggestion.

To his credit, my friend now considers the matter closed, and has asked me not to publicize the name of the company involved.

But it’s worth reflecting for a moment on just what went on here, and why. The author of the offending email was rude, to be sure — rude in a way that was supposed to be kept behind the scenes, but rude none the less. Whether such rudeness amounts to an unethical lack of respect is a question that is probably best answered in terms of frequency. We all have grumpy days; but a pattern of rudeness amounts to a display of disrespect that is inconsistent with the ethical demands of customer service. We don’t know whether the employee in question was merely having a bad day. But I’m pretty sure that the company in question came within a hair’s breadth of having a very bad day from a public relations point of view. Because, needless to say, the company involved only narrowly avoided a minor social media disaster. Had my friend decided instead just to post his experience on Twitter, the story might well have gone viral.

This reminds me of an anecdote I recently heard related by an executive at Disney, having to do with the customer-service orientation of the Disney employees responsible for picking up trash and emptying trash bins at the company’s amusement parks and resorts. The Disney executive said that, for years, those employees had been told that their job was to keep the place clean. The result: all those tourists leaving pop cans and popcorn boxes all over the place were inevitably viewed as pains in the neck, as obstacles these workers faced in trying to get the job done. The result was poor morale, and occasionally surly interactions with paying customers. At some point, someone had the bright idea of changing these employees’ mission: no longer would their mission be to “keep the place clean.” Instead, their mission would be to make customers’ experience at Disney a positive one. Sure, that would mostly consist of keeping the place clean, but that would just be a means, not an end in itself. The result, or so the story goes, was a big improvement in morale. The lesson: there’s no need to see customers as a burden if it is made clear that customers are why you’re there in the first place.

Making Sense of Tone at the Top

In my last blog entry, I began a discussion of the question of the extent to which the right “tone at top” contributes to a company’s success. I began by exploring just what we mean by ‘tone” in this context, and what kinds of activities and behaviours by leaders should be seen as constituting setting the right tone.

Next, what does it mean to focus on tone specifically at the top?

The “top” can’t be thought to mean the CEO, or even the entire executive team. “Top” should be interpreted as meaning whomever is at the top, for you, ethically: whomever you regard as a moral leader. Because leadership isn’t a job title. Anyone who embodies the key leadership values of trustworthiness, insight, humility and enthusiasm is likely to be seen as a leader, regardless of job title.

So let’s talk for a moment about not just the tone at the literal “top”, but also the tone at the middle. Average tenure of a CEO these days is, what, 4 or 5 years? This means that the tone at the literal top of the organization is likewise liable to change every 4 to 5 years. But lower down, every organization has a larger class of middle managers who come and go much less frequently.

And from the point of view of ethics, that has to be important. Don’t forget, in most large organizations, most people never get to meet the CEO, or for that matter any C-suite executive. For them, someone in middle management is effectively “the top” – the top of the relevant chain of command. So the right tone has to be set at many managerial levels.

Finally, we need to ask what “success” is. When we assert that positive tone at the top “ensures success,” what do we mean?

“Success” here has to be taken to mean “ethical success,” because “ethical success” means doing justice to the full range of ethical obligations that obtain within an organization. That means doing your best to earn a decent return for investors, while at the same time treating people with respect and playing by the rules. Success in this regard means achieving a reasonable level of compliance with not just the letter but also with the spirit of the law, and with the unwritten rules of the game, and with reasonable social expectations.

Now, no one can ever reasonably expect to turn a tough, competitive business environment into a love-in, or expect that any organization with hundreds or thousands of employees will be able to guarantee that no one ever breaks a rule. But if an organization is going to come even close to meeting reasonable expectations, meeting the capitalist ideal of playing fair while trying to earn a decent living by selling a decent product, it is going to have to do that in large part through the force of effective leadership.

A positive tone at the top is the closest thing there is to a guarantee of success, as long as you think critically about what those words must mean for a complex organization in a competitive environment.

What’s Wrong With Wal-Mart Bribery, Anyway?

Everyone is aware by now of the stunning exposé on bribery at Wal-Mart de Mexico. As promised, this is the next in what will likely be a series of commentaries I’ll post on the scandal.

It’s worth starting at the very beginning, by considering the very basic question: What’s wrong with bribery in the first place?

The fundamental ethical problems with bribery are clear. Bribery of public officials induces those officials to engage in acts of disloyalty. Civil servants are sworn to uphold the public good, and every decision they make needs to be made on that basis. Bribery violates that principle; it interferes with the decision-making of the functionaries of a democratic system.

Bribery also tilts an otherwise fair playing field. It’s one thing for a company like Wal-Mart to muscle into new territory by means of its superior management techniques and hyper-sophisticated supply-chain. Such advantages are well within the rules of the game. If you invent a better mousetrap, the maker of the old mousetrap has little grounds for complaint when driven out of business. But bribery is well outside the rules of the game. It represents a refusal to compete openly and fairly, and an attempt instead to gain special advantages that have nothing to do with ingenuity or with the quality of one’s services.

And, from a systemic point of view, bribery is a zero-sum game that acts as a drag on an economy. Consider: when two companies engage in bribery as a competitive strategy, the only guaranteed winner is the undeserving recipient of the bribe. The companies involved suffer unnecessary expenses that could better have been spent on research and development, on higher wages for employees, and so on — if only they were jointly able to forgo the bribery.

There is, from an ethical point of view, no plausible pro-bribery argument.

What about cultural differences, you ask? We are all aware that, in doing business in a foreign country, we are liable to run into ways of doing business that would not pass muster back home. And we’ve all heard the saying, “When in Rome, do as the Romans do.” But that saying is no doubt used as an excuse for wrongdoing far more often than it is used as a reminder to be sensitive to cultural variations. The trouble is that bribery is a lousy way to show respect for someone’s culture. You don’t respect a culture by corrupting its public officials. Never mind the fact that bribery, though perhaps not uncommon in Mexico, is none the less illegal.

But perhaps the most stinging critique of bribery is this. If you have to engage in bribery in order to succeed, it implies that you are not very good at your job. Eduardo Castro-Wright, the man who was Wal-Mart de Mexico’s CEO at the height of its bribery activities, was considered a true Wal-Mart star. In fact, he’s now vice chairman of Wal-Mart Stores, Inc. And his reputation was built in no small part upon his stunning success in pushing Wal-Mart de Mexico’s rapid expansion. But, as it turns out, he wasn’t quite as great a manager as he seemed to be: the rapid expansion wasn’t so much a credit to him as it was a credit to the campaign of carefully-targeted bribery conducted by his underlings. As is so often the case when it comes to white-collar crime, this suggests that senior managers at Wal-Mart de Mexico were not just lacking ethically, but lacking as managers too.

Greg Smith, Goldman Sachs, and Corporate Culture

By now everyone has heard that a guy named Greg Smith wrote a letter this week. Who is Greg Smith and why does anyone care? Why is Greg Smith’s letter getting attention from anyone who isn’t a Goldman Sachs employee, customer, or shareholder? Sure, he’s a mid-level executive at one of the world’s most powerful financial institutions. So he’s certainly not a nobody. And sure, Goldman, like other big financial institutions today, is seen by many as the corporate embodiment of evil, and so people are bound to be fascinated by an insider’s repudiation of the firm — especially accompanied, as it was, by a good dollop of juicy details. But there’s more to it than that, and the “more” here is instructive.

I think the key to understanding why Smith’s letter caused such an uproar is the fact that Greg Smith’s letter taps into the deep, dark fear that every consumer has, namely the fear that, somewhere out there, someone who is supposed to be looking out for us is instead trying to screw us. Smith’s letter basically said that that is exactly what is going on at Goldman, these days: the employees charged with advising clients about an array of complex financial decisions are, according to Smith, generally more focused on making money than they are on serving clients.

Now, first a couple of words about the letter. It goes without saying that we should take such a letter with a grain of salt. It’s just one man’s word, after all. Now that doesn’t make Smith’s account of the tone at Goldman implausible. He’s not the first to suggest that there’s something wonky at Goldman. It just means that we should balance his testimony against other evidence, including for example the kinds of large-scale surveys of Goldman employees that the company’s own response to Smith’s letter cites. Then again, such surveys are themselves highly imperfect devices. Either way: buyer beware.

(Note: one group that must take this stuff seriously is Goldman’s Board of Directors. A loyal employee taking a risk like Smith has is not a good sign, and his story deserves to be investigated thoroughly by the Board.)

OK, so let’s bracket the reliability of Smith’s account, and ask — if it accurately reflects the tone at Goldman — why that matters.

It matters because of this awkward fact: in many cases, in business, all that stands between you the customer and getting ripped off is that amorphous something called “corporate culture.” Most of us are susceptible to being ripped off in all kinds of ways by the businesses we interact with. That’s true whether the business in question is my local coffee shop (is that coffee really Fair Trade?) or a financial institution trying to get me to invest in some new-fangled asset-backed security. My best hope in such cases is that the business in question fosters a culture within which employees are expected to tell me the truth and help me get the products I really want.

Now culture is a notoriously hard thing to define, and harder still to manage. Culture is sometimes explained as “a shared set of practices” or “the way things are done” or “the glue that holds a company together.”

Why does culture matter? It matters because, other things being equal, the people who work for a company won’t automatically feel inspired to spend their day doing things that benefit either the company or the company’s clients. People need to be convinced to provide loyal service. In part, such loyalty can be had through a combination of rewards and penalties and surveillance. Work hard, and you’ll earn a bonus. And, Treat our customers well, or your fired. And so on.

But sticks and carrots will only get you so far. Far better if you can get employees to adopt the right behaviours voluntarily, to internalize a set of rules about loyal service and fair treatment. An employee who thinks that diligence and fair treatment just go with the turf is a lot more valuable than one who needs constantly to be cajoled. And, humans being the social animals that we are, getting employees to adopt and internalize a set of rules is a lot easier if you make it part of the ethos of a group of comrades. Once you’ve got the group ethos right, employees don’t act badly because, well, that’s just not the sort of thing we do around here! In the terminology used by economists and management theorists, culture helps solve ‘agency problems.’ Whatever it is that you want employees to be focusing their energies on, corporate culture is the key.

Of course, there’s still the problem of what exactly employees should be focusing their energies on. Should they be taking direct aim at maximizing profit? Or should they be serving customers well, on the assumption that good service will result in profits in the long run? In any reasonably sane market — one without ‘TBTF‘ financial institutions — the latter strategy would be the way to go, practically every time. And that fact is precisely what makes large-scale commerce practical. Consumers enjoy an enormous amount of protection from everyday wrongdoing due to the simple fact that most businesses promote basic honesty and decency on the part of their employees.

Unfortunately, it’s far from clear that Goldman operates in a sane market. So it is entirely plausible that the company could have allowed its corporate culture to drift away from seeing customers as partners in long-term value creation, toward seeing them as sources of short-term revenue. I don’t know whether Greg Smith’s tale is true, and representative of the culture at Goldman Sachs. But if it is, that means not just that Goldman isn’t serving its clients well. It means that Goldman embodies a set of values with the potential to undermine the market itself.

Corruption and Ethics in the Russian Economy

Back in February I blogged about Russian Business Ethics, and about the way that watching a developing economy helps us see the significance of ethics in the functioning of any economy. If you want to understand the role of honesty, trust, and transparency in a market, you just need to look at a society experiencing a severe deficit of those things.

Here’s more in a similar vein, by Sergei L. Loiko, for the LA Times: Taking on Russian corruption

Moscow lawyer and blogger Alexei Navalny has been singlehandedly taking on Russia’s state-controlled energy giants, accusing them of large-scale embezzlement and corruption….

(See also this piece on fighting corruption in India: Wake-up call on anti-graft laws, from The Hindu Business Line. I also blogged last year about Business Ethics in China.)

It’s perhaps worth pointing out that there really is no ethical debate over corruption: there is no pro-corruption case to be made. No one is in favour of corruption, generally — though of course the corrupt are in favour of those instances of corruption that help them. There just is no systemic upside to bribery, embezzlement, and unremediated conflict of interest. But this fact sometimes go unnoticed when people lump bribery, for example, in with various other dubious practices that North American companies might engage in overseas. I recently had a senior academic suggest to me, in the context of a discussion of labour standards, that third-world sweatshops are just another money-grubbing technique that corporations use whenever they can get away with it — just like, you know, bribery. But there is an important distinction to be made there: sweatshops may sometimes play the role of unfortunate-but-necessary engine of economic growth. Bribery is just a drag on an economy. As seen by competing businesses, it’s a zero-sum game: either my bribe works or yours does. From a social point of view, it results in misallocation of resources: contracts go not to the most efficient producer, but to the producer that excels at the bribery game. This is another example of why it’s so important, in our normative evaluation of business practices, to maintain a mental distinction between things that are unfortunate, and things that are wrong.

Bullying in the Workplace

Most people think of bullying as a problem of the schoolyard. But increasingly that term is being used to describe aggression in all kinds of settings in which power imbalances are common and in which aggression is problematic. Bullying in the workplace, for example, is far from new, but it has been in the spotlight in recent years.

See, for example, this editorial by Theresa Brown, for the NY Times, on bullying in healthcare workplaces: Physician, Heel Thyself

…while most doctors clearly respect their colleagues on the nursing staff, every nurse knows at least one, if not many, who don’t.

Indeed, every nurse has a story like mine, and most of us have several. A nurse I know, attempting to clarify an order, was told, “When you have ‘M.D.’ after your name, then you can talk to me.” A doctor dismissed another’s complaint by simply saying, “I’m important.”

While bullying may be a particularly dangerous in healthcare, where patients’ lives can easily depend on just how well a team of heal professionals functions, bullying, or even subtler forms of interpersonal conflict, can be common in any kind of workplace. And indeed, while the risks of poor team performance in healthcare are especially vivid, it has the potential to have serious negative effects — effects far beyond the people directly involved — in all kinds of businesses that themselves have significant impact on people’s lives or the natural environment. It isn’t difficult to imagine, for example, bullying being part of the root cause of the kind of poor teamwork that might result in an environmental catastrophe like BP’s Deepwater Horizon spill.

Brown’s article rightly points to the significance of ‘tone at the top.’ Basically, if the boss is a bully, such behaviour is liable to trickle down the chain of command. So leaders have a strong obligation neither to engage in, nor to tolerate, bullying. But people much farther down the chain of command also face ethical questions with regard to bullying — including especially how to respond to it and deal with it. Those with the least power within an organization are likely going to be the most vulnerable to bullying. Some of the toughest ethical challenges faced by junior people in an organization may have to do with responding to pressure from above, and with the difficulties inherent in being at the bottom of their organizational hierarchies. Younger employees, or ones simply new to that particular workplace, understandably find it difficult — and a source of moral distress — not just to survive bullying, but sometimes to be involved in courses of action that they see as unethical and yet that they are powerless to do anything about. It’s hard to know what advice to give to people in such situations, because sometimes there really is very little they can do. But one thing they can do is to consider, starting right now, how they should treat those beneath them in the hierarchy, if and when they themselves move up it, and how they are going to make sure not to fall into those same, all-too-common, toxic behaviours.

Pink Toenails, Gender Identity and Social Responsibility

This one’s a real tempest in a teapot. Or rather, in a bottle of nail polish.

OK, so here’s the short version. Clothing chain J. Crew’s latest catalog includes a picture of president and creative director Jenna Lyons painting her young son’s toenails pink. Yes, pink — the colour most closely associated, in North American culture, at least, with traditional femininity. Criticism ensued, alleging that J. Crew was acting (intentionally!) to promote a gender-bending agenda. The calibre and cogency of the arguments in favour of that conclusion is about what you’d expect.

The main critic, Fox commentator and psychiatrist Dr Keith Ablow, provides an object lesson in how to cram as many argumentative fallacies as possible into a single piece of writing, in his oddly-titled editorial, “J. Crew Plants the Seeds for Gender Identity”. (I’ve blogged about the significance of logical fallacies before, here.) Among the good doctor’s fallacious arguments:

He alleges, without substantiation, that pink-toenail-painting is highly likely to result in gender confusion. In the absence of supporting evidence, we are expected to believe him because he’s got “Dr” in front of his name — essentially a form of illicit appeal to authority. He also engages in straw man argumentation (in which a critic attacks something his opponent never said nor implied), by suggesting that, via this ad, “our culture is being encouraged to abandon all trappings of gender identity” [my emphasis]. He also begs the question by assuming that pink is just for girls (and I’m wearing pink as I write this, by the way). He also has an unfortunate tendency to resort to rhetorical questions: “If you have no problem with the J. Crew ad, how about one in which a little boy models a sundress? What could possibly be the problem with that?” (What if my answer is “nothing”? Ablow provides nothing to help me, then.) Ablow also commits the fallacy known as appeal to ignorance when he points out that the effect of “homogenizing males and females … is not known” (i.e., we don’t know that it’s safe, so it is probably unsafe.) He also makes use of an illicit slippery slope argument, suggesting comically that ads such as this are somehow going to result in the end of all procreation, and, hence, of the human race. And Ablow’s argument as a whole amounts to one giant, fallacious, appeal to tradition. I could quite literally teach the entire Fallacies section of my Critical Thinking class just by having students pick apart Ablow’s critique of the J. Crew ad.

(Note that another critic, Erin Brown, over at the conservative Culture and Media Institute, commits fewer fallacies, but only because her article is shorter. But then she apparently doen’t even know what J. Crew is, referring to the men’s and women’s clothier as a “popular preppy woman’s clothing brand.” I happen to own two J. Crew ties. Men’s ties.)

Now, my response to the critics of J. Crew’s ad may seem flippant. So be it. Sometimes ridicule is the best response to something ridiculous. But there is a serious point to be made, here, about the social responsibility of business.

Ablow and Brown share one important view in common with many critics of modern capitalism, namely this: they all believe that businesses have an obligation to pursue certain social agendas. They merely disagree over what that agenda should be. For Ablow and Brown, the social obligation of business is to defend & promote good ol’-fashioned American values, including apparently carefully scripted gender roles. For critics of capitalism, the social obligation of business is to promote social justice, environmental values, gender equality, and so on. In either case, those who urge businesses to adopt social missions — as opposed to merely making and selling stuff that people want to buy, within the bounds of law and ethics — ought to be careful what they wish for. Because if and when businesses do take up social agendas, they may not be the agendas that those advocates prefer.

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Thanks to Laura for showing me this story.

Corporate Motives and Discrimination

Motives, especially corporate ones, are hard to figure. Some people, of course, are skeptical about the notion that an abstract entity like a corporation can have motives (or intentions or beliefs of attitudes or any of those sorts of things), even though we all have a tendency to talk about corporations as if they are capable of having them. It’s pretty common to talk about a company “expecting” profits to rise next year, or “wanting” to increase its market share, and so on. But even if we’re not so skeptical about attributing motives (etc.) to companies, their motives can be pretty elusive. We may not be ready to believe corporate spokespersons when they tell us what their company’s motives are, and besides, even if everyone within a company agrees that a certain course of action is the right one to take, it’s entirely possible that different parties within the company all have different motives for doing so.

But sometimes it’s good to at least try to understand what motivates companies, particularly when we want to diagnose a widespread and/or persistent problem, in order to suggest changes.

This question of determining motives came to mind when I read a story about an age discrimination case at 3M: “3M settles age-discrimination suit for up to $12M”.

3M Co. has agreed to pay up to $12 million to settle an age-discrimination lawsuit with as many as 7,000 current and former employees.
The 2004 lawsuit targeted the company’s performance-review system, alleging that older workers were disproportionately downgraded. It also accused the company of favoring younger employees for certain training opportunities that could fast-track them for promotions….

If we accept for the sake of argument that some sort of systemic discrimination took place at 3M, what on earth might have motivated such behaviour?
Here are a few possibilities:

  • Profits. Maybe the discriminatory practices and policies were an attempt to increase efficiency in order to boost profits. This of course is the go-to assumption for most corporate critics.
  • Energy. Maybe those who engaged in age discrimination weren’t thinking specifically about the end goal of profits, but merely had a certain vision in mind of the kind of company they ought to have, and the kind of youthful energy that makes a company vibrant.
  • Recruitment. Maybe 3M wanted to give younger employees lots of opportunities so that they could brag about opportunities for young employees when recruiting new talent. Most recruits, after all, are likely to be young, and ambitious young people are likely to be drawn to a company that holds the promise of great opportunities.
  • Bias. It could be that various key decision-makers inside 3M were simply personally biased, as many (most? all?) of us are, against older employees.
  • Justice It’s at least possible that key decision-makers within 3M actually thought that giving preferential treatment to younger employees was the morally-right thing to do. Quick, ask yourself this: if 2 patients each need a heart transplant, and you’ve got just one donor heart, and one patient is 15 and the other is 55, who would you give the heart to? Surely all of us are tempted, from time to time, to think that the young are particularly deserving of opportunities. Note that I’m not defending such a view, here.

What do you think? Note that the point here is not about the 3M case, but about what could motivate a company, any company, to engage in discriminatory behaviour. And again, I think it’s worth contemplating the possibility that there simply was no corporate motive (nor maybe even a truly corporate “cause”).

The Importance of “Tone at the Middle”

Ethics: Tone from the MiddleIn yesterday’s blog entry, I mentioned that I was attending the Global Ethics Summit in New York. I was there in part because I had been asked to moderate a panel, the topic of which was “Tone from the Middle: Who, Why and How?” It’s a great topic. I’ve long said that there are two competing truisms with regard to creating an ethical culture within any company. One has to do with leadership, and the idea that ethics has to come from the very top of an organization. The other truism has to do with buy-in, and the fact that ethics cannot be imposed from the top down — you have to get buy-in from the folks on the front lines. But too seldom do we talk about the crucial middle layer, the layer of managers that takes orders, and other more subtle signals, from the C-suite, and passes them along. And whether they pass along a clear, urgent signal about ethics or a distorted or weak signal is a huge variable. That middle layer is a crucial conduit, but it is also a crucial source of ethical momentum if and when leadership from the top is lacking.

It’s worth noting that the audience at this event consisted mostly of corporate lawyers working in ethics-and-compliance. The questions I posed to the panel were designed with that audience in mind, but hopefully they are of broader interest. Here are a few of the questions I posed. I welcome your own answers and suggestions in the Comments section.

  • Many companies, especially large ones, use web-based tools as an efficient means of conducting ethics training. But such tools may not be ideal for conveying and ensuring the right “tone,” which seems to be something intangible. What concrete steps can a company with thousands of employees take to reach that crucial “middle” layer of the company and make sure that the tone there is right?
  • Why have so many firms struggled to reach the “middle”? Is it a lack of appreciation of the importance of the middle? A lack of understanding of how to influence that middle layer, or something else?
  • Assuming we can figure out how to influence the “tone at the middle,” the further challenge is to figure out what that tone should be. The short answer, of course, is “an ethical tone.” But what does that mean, more specifically, in practice? What kind of tone should we be looking to establish?
  • Having the right “tone at the middle” arguably involves two challenges: one is avoiding a negative tone — a culture of fear, a culture that is afraid to talk about ethics — and the other is promoting a positive tone — a culture in which ethics is talked about openly. Those are perhaps 2 sides of the same coin, and maybe the one has to be avoided before the other can be promoted. Which part of that is likely to be more challenging?
  • One of the problems with relying on tone at the top is that the top can be pretty unstable. The average tenure of a CEO these days is something like 3 or 4 years. Is the relative stability at the middle of an organization part of what makes the tone at the middle so important?
  • In my own blogging, teaching, and consulting, I sometimes meet resistance to the use of the word “ethics” (as opposed to “corporate citizenship” or “CSR” or “integrity,” for example) because for some people the word “ethics” immediately makes people think of wrongdoing. Is finding the right language to talk about “doing the right thing” a challenge?
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